Someone recently asked me about the differences between a reverse mortgage and an equity take out. You may wonder the same.
A reverse mortgage pays you every month using your property's equity, whereas an equity take out allows you to borrower as much money as you require (provided it's within lending guidelines) and make monthly payments on it.
Both loans come with added interest, so deciding which one you should take ultimately depends on your financial situation and your age since reverse mortgages are only available to those over 55 years of age.
Some people can't afford to make monthly payments on a mortgage loan, like, for example, retired people receiving a Government pension. And, we definitely don't want people to get into a situation that puts them at risk of mortgage default, so an equity take out may not be suitable for them.
A reverse mortgage can help people that have affordability concerns since their equity would be paid to them in a smaller monthly payment.
Although a reverse mortgage has its benefits, it also has downfalls, including the fact that borrowers over the age of 55 are reducing their assets, accumulating interest and possibly interfering with inheritance plans.
If you can comfortably make monthly payments, then it would be a wiser option to consider an equity take out through an equity program that considers your property's value without a heavy reliance upon income requirements. This way you can receive the lowest interest rates which makes borrowing more affordable.
If you have questions about either type of mortgage, please call or write. I have expertise in both equity mortgages and reverse mortgages and can advise you with confidence.
Sarah A. Colucci
Mortgage Agent Lic. M14000929
Mortgage Edge, Broker 10680
Direct: (647) 773-4849
By: Sarah Colucci
411 Queen St.
15 Wertheim Court, Suite 210
Richmond Hill, Ontario
Sarah A. Colucci, Mortgage Agent Lic. M14000929
Mortgage Edge, FSCO Lic. 10680